Netflix (NFLX) Stock Rockets 7%, Hits 52-week High, Investors Flock to Stay-at-home Stocks

UTC by Andy Watson · 3 min read
Netflix (NFLX) Stock Rockets 7%, Hits 52-week High, Investors Flock to Stay-at-home Stocks
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Netflix (NFLX) stock jumped 7% on Monday and hit a 52-week high price of $400.51 per share. NFLX closed at $396.72 yesterday.

Netflix Inc (NASDAQ: NFLX) rose to a 52-week high on Monday as investors fled to stay-at-home stocks. With lockdowns being introduced to an increasing number of countries around the world and cord-cutting gathering pace across the U.S., the streaming giant is poised to win big.

Monday marked yet another wobbly performance for U.S. stocks: the Dow Jones lost 1.37% at the close, while the S&P 500 shed 1.01%. The Nasdaq 100, meanwhile, ended the session as the only major average in the green jumping 1.14%. It was largely thanks to the Netflix (NFLX) stock spike of 7% and a 52-week high stock price of $400.51 per share. NFLX closed at $396.72 yesterday.

What’s behind Netflix (NFLX) Stock Surge?

In August last year, research group eMarketer predicted that the number of people in the U.S. who are “cutting the cord,” i.e., ditching the traditional pay-TV packages, would surge by 19% to reach a figure of 22 million in 2019 alone. With a looming recession on the horizon, this number can only go up as more Americans are turning to cheaper ways to spend their time at home.

Naturally, many of them are already familiar with Netflix’s growing catalog. However, there are people—mostly older consumers—who are yet to discover streaming services and who will probably be willing to cut their monthly expenses by $50-75 (average cost of cable and satellite subscriptions) and give their money to one of many streaming services providers. This is where Netflix and its competitors take the stage.

Social distancing is also working in Netflix’s favor: with many people stuck at home, the on-demand video services certainly provide some comfort.

In Europe, the streaming titan was under so much pressure that in mid-March CEO Reed Hastings revealed he spoke with European Union Commissioner Thierry Breton and agreed to cut the bit rates of Netflix’s streams across the Old Continent for a month. The bit rate reduction aimed to reduce Netflix’s traffic by 25% and still maintain a high-quality stream for its customers.

Days later, Netflix’s website was down for an hour for some customers in Europe and the US. Although the company did not reveal the reason behind the outage, it was likely due to a massive amount of users streaming at the same time.

Can Netflix Stock Go Any Higher?

In its latest earnings release, Netflix boasted the figure of 169 million paid subscribers worldwide, with over four million more using the free trial. The next report is set to come out on April 21 and will reveal an updated figure.

Although the company has indeed raised prices significantly in most markets in 2019, some analysts seem to believe that there is plenty of room for another hike in 2020. And if not, investors are confident that in 2021 the subscription prices will undoubtedly go up as the world crawls out of the coronavirus crisis.

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